The Hindu Business Line : Highest bid may be benchmark for Satyam open offer price

Mumbai, Feb. 3 The highest quote in any competitive bid for Satyam Computer could be used as a benchmark for determining the open offer price for the company. It is reliably learnt that this is one of the possibilities being considered by SEBI, which is revising its takeover regulations to accommodate abnormal cases such as Satyam.

This methodology is being seen as a safe and transparent solution to arriving at an open offer price, said sources.

The Government-appointed Satyam Board had sought exemptions from the takeover code, as the six-month average market price for an open offer under the current regulations would deter suitors from bidding for that company. Satyam prices have plunged since promoter Mr Ramalinga Raju’s admission in early January of a fraud in the company.

On Monday, the SEBI Chairman, Mr C.B. Bhave, said the regulator saw merit in the argument that the Satyam’s market price until January may not make for a credible benchmark, being based on the company’s financials that have been disowned by the auditors themselves.

The counter argument this set off among legal experts was that the current market price itself is equally rootless, since everyone is still in the dark about Satyam numbers, which need restatement.

Using the highest competitive bid price to arrive at the open offer price frees the entire process from taking into account the market price.

Some market experts feel the entire exercise only serves to pave the way for easy acquisition of Satyam by other corporate hawks. “If the pre-January Satyam price was higher than it should have been, assuming it was based on false financials, then post the scandal the loss of credibility has certainly brought the price lower than it should have been,” said a broker. “The idea of a six-month average is exactly that, to iron out the volatility in the stock price.”

Many companies, including Larsen & Toubro and the Spice Group, have shown interest in acquiring Satyam. L&T, which acquired a 4 per cent stake in Satyam in December, raised its stake to 12 per cent a week ago.